Be Careful What You Wish For: A Warning on Ticket Price Limits & Hoping for a Panacea

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By ‘ABW Guest Blogger’ Calvin Masterson (@calvinmasterson)

Ever since I started really following English football & the Arsenal (around 2008) one thing has been a constant pain point (besides Arsenal in fourth place): complaints about ticket prices. Fans of Arsenal (& other clubs) are constantly raising the issue of the ever-increasing prices of tickets. This has led to the formation of fan groups, rallies & protests against clubs and the Premier League itself. The noise has only intensified since the announcement of the new five billion pound domestic TV rights deal to begin in 2016-17. One common refrain since then (most recently mentioned by Tim Payton of the AST on ‘A Bergkamp Wonderland’ Podcast #103 is for a freeze on PL ticket prices. However, a freeze (or any method of price limiting) has one potentially massive negative consequence: discrimination.

You are discriminated against every day of your life. This may shock some people but it is true. I am not talking about discrimination on the basis of sex, gender, creed, or race (although those do occur). No, I am referring to discrimination on the basis of price. This is a fundamental tenant of modern Microeconomic theory. Any first year economics student learns this concept, which goes something like this: in a market where demand is greater than supply (every market), the suppliers decide whom to allocate goods to on the basis of price. Basically, whoever pays the most gets the goods. The idea is that the people who value the goods will pay the most and thus get the goods, which is a common goal of economics (making sure people who value goods more than others get said goods).

A common example for this is apartments (flats for my UK readers). The most desirable apartments (nicest amenities, best views, largest living area) go to those who can pay the most. We accept this as a basic premise of a capitalist system. However, what happens when you implement a price cap? We can see a real life example of this in New York City. Certain apartments in New York City are rent controlled. A rent controlled apartment that would normally rent for $700/month can now only go for $500/month. Thus, the landlords are not able to discriminate based on price. As a result they have to discriminate based on other factors. It may be something as innocuous as people with pets or it could be something as reprehensible as discrimination on the basis of race.

By now it should be clear as to how this could relate to football and ticket prices. Fans who pay the most get the most desirable tickets (with some protection in there for past ticket holders). If season ticket prices were to be frozen or knocked down clubs would no longer be able to discriminate based on price which begs the question from an economic perspective: how else would they decide who gets allocated prime seats or seats for prime games? One common response would be to show  preference for fans who have been going the longest to games. However, this prevents new fans (who may be just as, if not more, passionate) from getting tickets. In the long run it could discourage potential supporters from becoming fans, a thought I am sure delights none of us.

Another possible discrimination could be to give priority to local fans. However, that discriminates against foreign fans, or fans that have to travel larger distances, for whom a large portion watching the club involves waking up early or missing work for a big Champions League match (which generally occur during work hours). These are just two of countless ways the club could discriminate.

In general, if the clubs lose the ability to discriminate on the basis of price they have to discriminate using some other factor. Could it be better? Sure, but it all depends if you are in the group being discriminated against. Fans are within their rights and should keep fighting for reduced ticket prices – but expecting it to be a panacea will only lead to more Champions League style heartbreak.

By ‘ABW Guest Blogger’ Calvin Masterson (@calvinmasterson)

Calvin enjoys a good debate on Twitter – go give him a follow and let him know if you agree or disagree – OG

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